I am a first-time investor looking to purchase a first multi-family property in Texas. I've been searching in Austin and surrounding areas but it is super hard to get a positive cap investment... So I am looking at positive cap rate locations such as college station or Killeen and need some guidance (and if there are great deals, will also need a realtor). FYI I already have a pre-qual in place.
Some things I am looking for:
- $350-400K price range
- Positive Cap rate (haven't defined a % yet but maybe 3-4% would be a good start- the higher, the better)
@Steven Lee you can find positive cap rates as-is on quads in Austin that are rent ready. If the numbers you are crunching are coming out at negative cap rates I would ask you to give a sample of your analysis calculations and some of us here in the Austin MSA market can help provide insight if you are on track.
That said, if you are targeting sub $400k multifamily for college or military client base bias then Killeen, College Station, and San Antonio are solid options to consider.
@Steven Lee you can find positive cap rates as-is on quads in Austin that are rent ready. If the numbers you are crunching are coming out at negative cap rates I would ask you to give a sample of your analysis calculations and some of us here in the Austin MSA market can help provide insight if you are on track.
That said, if you are targeting sub $400k multifamily for college or military client base bias then Killeen, College Station, and San Antonio are solid options to consider.
I am a first-time investor looking to purchase a first multi-family property in Texas. I've been searching in Austin and surrounding areas but it is super hard to get a positive cap investment... So I am looking at positive cap rate locations such as college station or Killeen and need some guidance (and if there are great deals, will also need a realtor). FYI I already have a pre-qual in place.
Some things I am looking for:
- $350-400K price range
- Positive Cap rate (haven't defined a % yet but maybe 3-4% would be a good start- the higher, the better)
- Multifamily property (du/tri/four)
- Property management company to manage
- Military vs. college students
Thanks!
The biggest hot topic on small MF is usually the current landlord may not be charging market rents, so you have to look at your long-term play and see what it will CF once you have it stabilized at market rents. Now it's the same argument for large MF, we never want to buy on proforma; which is where small MF are pricing their assets.
It's tough but if you are committed to making the investment, you will make it work! best wishes,
its very possible to find positive cap rates in Austin as @Bryan Noth pointed out. You won't find 350-400k fourplexes. The cheapest one on the market currently is $499k. For duplexes one can pick up one in the $200k + price range.
Military vs college. It depends upon what you want. Military: you can get someone that would live their entire time that they are stationed in that location. Killeen/Harker Heights is great for it. College: you could get some very serious students that aren't interested in partying. I have had some great tenants that were college students. I have one client that targets professors and grad students and has done very well. Its really important to screen your tenants whether they are military or college students.
The property management company will be dependent upon your choice of locations and product imo. Some property management companies are excellent with managing fourplexes and then there are not very good. Screen your property management company just as much as your tenants. Ask for a couple of comparable properties and do a drive by to check on the quality of their work.